Cedric Berry, the analyst responsible for Israel at the credit rating agency Fitch, was interviewed yesterday (Monday) by Bloomberg newspaper and addressed the agency's decision to maintain Israel's economic credit rating as is. In his remarks, he explained that the agency was convinced that the judicial reform would not pass in its original form.
Berry further estimated that even if the current Israeli government holds its position for four years, it is not likely that a similar coalition will emerge afterwards. "A very strong and disruptive reform will be required to cause a significant amount of damage," he argued. "We don't think that's where the government is headed."
Berry also addressed claims regarding the impact on the hi-tech industry. In the interview, he explained that "even if there is some outflow of financial and human capital, there is still substantial activity in Israel that is sufficient to drive the economy forward. According to our estimation, there will continue to be investments in Israel when the global trend also changes. the main message is that this is not doomsday."
"In order for the credit rating to be negatively affected, there would need to be a significant outflow of capital and talent, and this is not something we expect to happen right now," Berry added. He also addressed the fluctuations of the shekel and stated that "currencies and stocks tend to react more strongly than economic fundamentals."
As previously mentioned, last week the company announced that it is maintaining Israel's credit rating unchanged at A+ with a "stable" outlook. In the forecast provided in the article, the company stated that "the balance between a diverse and resilient economy, possessing high added value, strong external financial metrics, versus elevated government debt ratios, high security risks, and political instability hindering policy implementation." However, the agency added a cautionary note that continued adherence to its original trajectory of reform could result in a credit rating downgrade.
